New figures show that businesses must assess their own risk to fraud, says expert

Alan Sheeley, a civil fraud and asset recovery specialist at Pinsent Masons, the law firm behind Out-Law.com, recommended businesses carry out a risk assessment and take a number of other actions in response to a recorded increase in fraud carried out against UK companies.

According to KPMG's latest bi-annual fraud barometer (15-page / 1.14MB PDF), the cost of fraud in the UK in 2015 was £732 million, up from £717m recorded for 2013 in the 2014 report. The figures reflect those relevant to fraud cases heard in the UK’s Crown courts where charges are in excess of £100,000.

KPMG said that businesses were the victims of £332m worth of fraud last year, compared with £187m in 2013. Public bodies and investors lost £190m and £140m to fraud in 2015, the new report said. Sheeley said the figures, and those recently released by the Office for National Statistics, were "just the tip of the iceberg" on real fraud levels.

"The results from the Office for National Statistics earlier this month identified that there was a 5% increase in the volume of fraud offences," Sheeley said. "Those figures, and those now published by KPMG, are just the tip of the iceberg as there are likely to be significantly more frauds which are not reported to the authorities and certainly many instances where the on-going fraud has not yet been uncovered. With figures like these, it is clear that the private sector is failing in its battle against fraudsters. In order to reverse this worrying trend, drastic action must be taken."

"I recommend that all organisations should undertake a risk assessment to identify areas of potential vulnerability and to assist in implementing the necessary procedures and safeguards to prevent systems being compromised. It should come as no surprise that merely implementing procedures is insufficient. Organisations must ensure that they actively review their procedures and carry out audits to assess the effectiveness of such policies. It is important that organisations implement policies and action plans aimed at preventing, detecting and indeed reacting to a fraud. The old adage of prevention always being better than cure applies most obviously with the threat of fraud," he said.

Sheeley said that where an organisation falls victim to fraud they need to act "without delay" to maximise their chances of recovering any lost assets.

"By instructing specialist civil fraud solicitors as soon as a fraud is identified, organisations will be directed on the best way to identify the fraudsters and seek to recover the assets which have been misappropriated," Sheeley said. "This could be by way of disclosure orders against banks which have received fraudulent transfers to identify fraudsters and assess where the monies are located or by obtaining freezing orders against the fraudsters themselves to prevent them transferring or dissipating their assets."

"In order to be successful, it requires decisiveness and prompt action. Waiting for the authorities to decide whether they are prepared to investigate a fraud could result in fraudsters disappearing, evidence becoming harder to trace and assets being transferred abroad. Whilst most may feel it is the duty of the authorities to protect them from fraudsters, it is important that businesses and individuals take the measures they can to counter the ever-growing threat of fraud. This is likely to require time, effort and resource on the part of organisations but the benefits such an approach will yield significantly outweigh the costs and any perceived disadvantages," he said.